Five Years of Tackling My Student Debt: An In-Depth History
by Dani Fankhauser
In August 2010, I started my post-graduate school life with loans adding up to just over $60,000 with an interest rate of 8 percent, meant to be paid back on a 10-year plan with monthly payments of $750. In May, I made my final payment, for a total of $73,116 paid over the life of the loan, which included living expenses for the 12 months in school, and a master’s degree from Northwestern’s journalism school that currently costs $54,912.
There were days at work with poorly cooked homemade lunches, and guilt-plagued trips to the store to buy a simple container of shampoo, where I would debate internally whether the extra $5 could translate to significant uptick in happiness every time I washed my hair. I was embarrassed to admit what my lifestyle entailed and unsure I could explain why it was so important for me to pay off these loans early, in a time when it seemed like everybody had loans and nobody’s job paid them what it should. Now that it’s over, I want to shed some light on the types of sacrifices and compromises were necessary for me to split my loan payment plan in half.
Take-home income: $2,000
Food (groceries and eating out): $400
Loan payment: $750
Phone (my cut of a family plan): $30
Leftover for savings, emergencies: -$80
Two months after graduating, I started my first job at a magazine in Orange County, California. It was full of perks (I got to interview local artists, take friends out for fancy meals to write restaurant reviews, and at one point, test drive a Lamborghini), but I quickly realized I could barely break even on the salary.
My first decision was to decrease my expenses. Unfortunately, cheaper apartments were nowhere to be found, at least without the headline, “Calling all bros, dorm style living on the beach.” Thinking I could save money on gas, I paid $850 for a yellow Honda scooter, the kind with the smaller engine so you don’t need a motorcycle license. It took me up to 35 mph on my commute on the Pacific Coast Highway, but for fear of dying, I only rode it occasionally. At one point, I replied to a Craigslist ad to be a cocktail waitress in Dubai, where housing would be comped in addition to a reasonable monthly stipend. My own Craigslist post, an offer to take care of someone’s boat in exchange for living on it, went unanswered.
With my expenses not going anywhere, I decided I needed a better-paying job. In May 2011, a friend of a friend raised an investment for his startup, and was looking for someone with my experience, so I left my first job after seven months and moved down to San Diego.
Take-home income: $2,600
Loan payment: $750
Entertainment (Netflix, books, etc.): $50
Charitable giving: $260
Despite a generous salary jump, I moved into the next tax bracket, so the total income increase was not what I had hoped. But, I finally lived close enough to my office to ride my scooter every day. I was paying $2 for a tank of gas and getting police complaints left on my car because it was parked in the same place for so long.
I signed up for a class called Financial Peace University through my church with the intention of making friends (financial advice doesn’t sound exactly compelling when you don’t have much money), but quickly realized I had one personal finance question that hadn’t been addressed thus far in my student loan journey: Is there any reason to save money as long as you have student loans?
My loans were scheduled to stick around for 10 years. By the time I was done, I’d be 35, at which point I hoped I’d be buying presents for my kids, not making handwritten cards for my own parents because I didn’t feel I could afford a real gift. I wanted to travel, which might require setting aside money, but the idea of a savings account seemed fruitless as long as the loans were there generating interest. The class didn’t have a magical remedy to creating both savings and paying loans simultaneously, but it confirmed my existing plan: Leave $1,000 in savings as an emergency fund, and put everything else towards debt. After that, the class recommended saving up three to six months worth of expenses, and then something else — I zoned out at that part because I doubted people would still be using money in the far-off future of once I had paid these loans.
My plan worked up until I was laid off from the startup with one paycheck’s notice. The stock options that could have grown to pay off my loans all by themselves were likely worthless before they had even vested. While the engineers I worked with went back to old jobs at digital agencies, I considered the Southern California journalism job market in which I had come up dry in the not-too-distant past — remembering the Dubai option — and decided to move to New York City.
Take-home income: $3,000
Rent (including utilities): $840
Loan payment: $750
Subway fare: $112
Rent is more expensive in New York, but you can expect the salaries to match. I was banking on it, and after a month of unemployment mixed with freelance writing for brand blogs, I had an apartment that ate up my increase in salary almost to the dime. But with less of a safety net and “moving home with the parents” a flight away instead of a drive, I needed to build more of a buffer into my finances.
My dad agreed to sell my beloved scooter for me. Normally a person who has moved away might be happy to get rid of a vehicle they can no longer use, at any price, but not me. I bought it for $850, and wasn’t going to sell it for less than $1,000. My dad, who appreciates a good bargain, was forced to field a number of reasonable offers, and turn them all away. I think he was as surprised as I was when someone finally took it at the advertised price. All of the cash went to the loans.
Then, I went through the last three months of credit card and debit card transactions. I made a list of everything that was automatic — the stuff you forget about — and cancelled it all. No more gym, no more Netflix. Annual expenses like Amazon Prime went as well. I needed to know what I was spending, and I needed to feel it. Charitable giving to my church and to world hunger organizations, something I had done since I first had a part-time job in high school, was canceled, too. I could make it up to them once the loans were paid off.
This budget was going to be serious. The fear in me came from getting laid off and never wanting to feel so vulnerable again, at least not with this wall of debt in front of me. You would think I would start saving money to hedge against losing a job, but I didn’t — I doubled down on paying the loans. I kept my bank account close to zero with my $1,000 untouched in savings, only to be used for a flight back to my parents’ house if it came to that.
Cutting costs meant getting creative. I worked for a news publisher, so invitations to press events meant free food. At one event, a public relations manager gave me a tour of a tech company’s new office, and offered me some artisanal ice cream. I made a joke about needing to eat dinner before dessert, gesturing towards the beef sliders, and was mortified when she thought I was serious. I was only a little less embarrassed when I realized I was serious. But, I still struck up a conversation with a stranger who was there with his friend, and munched on tiny sandwiches until I was filled and ready to go home.
If you’ve ever considered going on a morning jog in 17-degree weather, I have a tip: Just wear all your clothes. I layered yoga pants under running shorts, a yoga shirt under a T-shirt, then a long-sleeve sweater, a light running jacket, and a sweatshirt. I covered my ears with a thick headband and pulled the sweatshirt over my head and sometimes over my face. For my hands, I wore motorcycle gloves I got to use on my scooter, because why buy another pair of gloves when I already had these? In hindsight, I think the runs were less about saving money on a gym membership, and more about proving to myself that I had it in me to handle things like layoffs, moving to a new city and whatever else life was going to throw my way.
I thought I my lifestyle was thrifty, but that changed when I came across a Craigslist listing for an “Underpriced studio by the park.”
By underpriced, it was still double what I was paying for a room in the three-bedroom, one-bath apartment that I shared with a couple, another girl, a dog and a cat. But one particular evening, I hit a breaking point and was convinced I needed more peace and quiet. I never heard back from the man who was looking for a subletter, but was enchanted with the option long enough to make a new budget.
My first realization was that I could actually afford my own place, if I bought nothing but that, and food. I imagined myself in the peaceful stillness of a bare apartment with just a mattress on the floor, a laptop, and delicious homemade meals in the refrigerator. This is the life I was meant to live. My second realization was that, my rent payment being about equal to my loan payment, if I just doubled the loan payment instead, I could arguably be done paying it twice as fast. Five years instead of 10.
I needed a new budget, a stricter budget than the kind they recommend in personal finance classes that people pay to take. I would have one rule: Don’t buy anything.
This actually makes things really easy. In the mood for coffee, and there’s a shop down the block? Does getting coffee include buying something? Don’t get coffee. Your only pair of jeans has lost its stretch and are slightly too small, and there’s a sale at Nordstrom Rack — but getting new jeans involves buying something, so you’ll have to wear a skirt.
I grew up with a Target minutes from my doorstep, a place where dropping by for one thing means buying 10 other things you suddenly need. So I know the feeling, and I also know the best way to not buy anything merely involves never going into stores of any kind.
Once my “not buying anything” rule became a new norm, I graduated to what I call the queue method. It was winter, and I started seeing women wearing brown boots on the train. I had black boots, but not brown boots. I had black leggings, and brown boots looked great with black leggings. I really wanted a pair. But I wasn’t buying anything, so I put brown boots on a list. That list grew. Whenever I wanted something, instead of rationalizing about why I needed it, I put it on the list. I couldn’t buy something if I already had that thing, so the brown boots were out of the question, as long as the black boots still, uhh, worked. The list included a Karma Wi-Fi hotspot, a clutch from the same local designer I had gotten a purse, a new set of sheets, a better mattress and a neutral colored, high quality wool sweater I could wear every day throughout winter without anyone noticing. I decided I could buy one of these things each month. All the items on the list had to compete with one another (budgeting is easier when your desires become characters who fight with each other, instead of you fighting with your wallet). Whichever one was deemed most necessary went to the front of the queue.
Then, I looked at my existing costs again, to see if there was anything I could lose.
Transportation was costing me $112, every single month. I lived directly across the East River from my job, so I hypothesized whether I could buy a canoe or a stand-up paddleboard to save on the subway pass, but the challenge of where to store such a watercraft outweighed the potential benefits. A bike ride would take more than 40 minutes, and if a scooter in SoCal made me fear for my life, a bike crossing a bridge to New York City alongside cars was out of the question.
The one variable cost I could control was food. In line with my “don’t buy anything” mantra, I decided food could come only from the grocery store.
But even at the grocery store, anything chopped, washed or sorted in any way was off limits — if it looks like a human being touched it, at least on this side of the farmer’s market, you’re paying for labor as well as food. I bought real carrots that weren’t sliced and spinach in messy, dusty bunches. There was no buying hummus, but I could buy garbanzo beans in a can and mix them with olive oil and lemon juice with my roommate’s food processor to make my own hummus, and I had to get the lemon juice out of an actual lemon. I would scan receipts to see what items cost more than $3, and unless it was something that would last a month or more like olive oil, it needed to be in the $1–2 range. A bag of six bagels, peanut butter, a bunch of bananas, pasta and marinara sauce, not to mention most vegetables sold by weight, are all items easily in the $2-or-less bucket.
Because groceries turned out to be the one variable expense where thrift disrupted my life the least, I rounded up a few good meal ideas that cost around $3/serving, are easy to make, and aren’t going to leave you starving a half hour later.
- Marinara sauce
- Grated mozzarella
- Red pepper flakes
Mountain Man Work Lunch
- Baked potato
- Half a can of chili, any kind
- Half avocado, sliced
- Half cup quick oats
- Sliced almonds (can be $7.99 for a bag of these, so use sparingly)
Gluten-Free Mini Pizzas
- Polenta roll, sliced and fried like a pancake
- Sliced fresh mozzarella
- Tomato slices
- Fresh basil
Dairy-Free Easy Tacos
- Corn tortillas
- Canned refried beans
- Sliced avocado
- Two boiled eggs
- Sliced almonds
- Balsamic vinaigrette (if you’re taking this to work, put the salad dressing at the bottom of the Tupperware, layer with almonds and eggs sliced in half, then put the spinach or other leafy green on top so it doesn’t get soggy)
A massive spreadsheet kept track of every expense. If I left the office to get coffee and a brownie, I had to log it — the coffee and the brownie as separate line items. If I ran into CVS to get toothpaste, I would log it. It incentivized me to do all my necessary purchases in one run, so I wouldn’t have to log anything under the “fun” or “extras” categories. After a month I could look back at how much I was really spending on things like coffee, and if getting an occasional coffee when I was in the mood only added up to $20 total each month, perhaps I could decide it was worth the increase in happiness.
Desperate times call for desperate measures, but I recognized that if I felt desperate all the time, I wasn’t going to be able to keep this up. It was important for me to make sacrifices in places it didn’t hurt as much. That’s why I tried to not turn down social outings because of money — I didn’t want my budget to translate to loneliness. I could be harsh on myself in terms of what groceries I would buy, but I wasn’t going to skip a friend’s birthday because she wanted to go out for $12 drinks.
Because thriftiness was a way of life, I sometimes spent money to save money. I bought a pair of scissors from a beauty supply store for $20 so I wouldn’t have to spend $80 on a haircut. Luckily my hair at this point was long enough that I could pull the pieces around front to see what I was cutting — my short hair now would have been butchered by my DIY method. When I wanted to buy an immersion blender so I could easily make smoothies and save time making food, I bought the cheapest one I could find for $20, only to find it was incapable of blending fruit, so I carefully washed it, boxed it back up and returned it, and bought a better one for $60. When my doctor recommended an IUD instead of birth control pills, I looked it up on my insurance, and found that I’d only pay $40 one time for a device that lasted five years instead of $25 per month for the pills. The possibility of cutting an expense from my monthly budget outweighed any concerns. I don’t buy shaving cream or razors because I wax my legs with homemade sugar wax. I started using a Diva cup ($40) so I wouldn’t have to buy tampons, but as a bonus of the IUD, I haven’t had a period and have thus cut out the need for feminine supplies completely. Yet, an attempt to use baking soda and apple cider vinegar as shampoo and conditioner failed, so I continued to splurge on real hair products, and tried to exercise on alternate days so I could wash my hair fewer times and make the shampoo last twice as long.
There are only two ways to dedicate more money to monthly loan payments. One is to redirect money from other expenses, as I’ve described. The other is to find additional sources of income. Whether your full-time employer approves of your side gig is something I’ve found to be a sliding scale.
With the blessing of my employer, I continued writing for existing freelance clients after I took the job. But, the more I wrote at my full-time gig, the more I got asked to write similar stories elsewhere. This didn’t become problematic until I agreed to do an interview about freelancing in addition to a full-time job and my employer’s name was mentioned. My boss asked me to stop; so I continued working with the clients who weren’t using my byline for another five months. When I was asked to create a video tutorial that paid around $2,000 and almost certainly would require corporate approval, I pitched a second video and crossed my fingers that they client wouldn’t promote the program too heavily. The extra money from freelance was never consistent, but an extra $500 always seemed to come in right when I needed it, especially the freelance check that got mailed to roommates at a previous apartment, a full nine months after I turned in the story.
After a year in New York, an unexpected $5,000 came in from my old car. My parents wanted to wait to sell it “in case this New York thing doesn’t work out” and were finally convinced I had made it, I suppose. The cash went straight to my loans.
Eight months after deciding to double my loan payments, I was not only on track, but with the car cash, I was done for the year.
2014 and the Present
Take-home income: $3,400
Loan payment: $750
Subway fare: $117
The intentional and carefully crafted thrifty lifestyle was the foundation of paying off my loans early. This is important because the worst costs seem to come up unexpectedly.
My rent in Brooklyn went up to $1,150 after a move, then down to $1,000 when I broke the lease for something both better and cheaper. After 18 months at my job, I got a 12 percent raise. When my personal laptop died, I went without it for seven months before finally caving and buying a new Macbook Air so I wouldn’t have to work on personal projects on my work computer. It was stolen in an apartment break-in a few months later. My roommate and I were on the verge of moving, and three weeks later our new apartment was broken into and her laptop was stolen. I finally bought renters insurance for $125, and I ended up buying a second new laptop ($1,100), a mattress ($750), a domain name ($2,000) and a security deposit ($1,075) all in the same summer. I was miraculously able to pull off this series of purchases, thanks to freelance work, but I couldn’t sustain these types of one-time expenses.
When I got a bill from an emergency room visit, I was horrified to see I paid more than $500 for the few minutes I spent with the doctor, and even more horrified to see a separate bill for the hospital itself was another $500. It irked me when a dentist insisted I make an appointment for a cavity filling right away — sure, health decisions should be made for health reasons, but when each miniscule decision has a financial impact, it seems unfair that health care facilities aren’t more open about how much things cost, and aren’t required to communicate the financial implications when they decide to do something like a blood test. But, part of the problem is ignorance. Somehow, I’ve become an adult without knowing that just because a dental cleaning is free, the cavity the dentist finds won’t be treated for free, too.
When I was reeling from the apartment break-in, a friend said to me, “You know what will happen next.” I didn’t, but she explained, if a bunch of bad things happen, a really good thing must be coming, and she was right. A job offer came in, along with a 30 percent raise. I first read the offer on my phone while I was sitting on a park bench, eating a $5 foot-long from Subway, a mainstay from my time in grad school and something I never feel guilty about buying because I save the other half to eat for dinner. Some oil from the sandwich dripped on my dark green jeans, and I wondered if I would allow myself to buy new pants in the near future. With the new job, I could at least afford a Tide stain remover pen.
In January, I was still a couple months away from zero. What will I buy, when my loans are paid off, I wondered. In addition to my regular spreadsheet, I had started another list of things to buy. There’s a hairdryer on Birchbox that I’ve wanted for two years and haven’t bought yet (the one I have, from Target about 10 years ago, still works, unfortunately). I never bought the new sheets or the clutch, but after six months of living without a hairbrush when I left mine at my grandpa’s house, I finally paid $7 for a new one. In fact, looking back at the last few years, I am more surprised by the things I was able to buy, and still reach my goal with a few months to spare: A two-week trip to Puerto Rico, with discount airfare under $200 round-trip from New York and a $12/night hostel; a $400 brown wool sweater found on Zady that I really did wear just about every day one winter, a resale $400 Herve Leger dress for a boyfriend’s work party that I intended to turn around and sell but haven’t yet; two new iPhones, each about $200, the second one with insurance; a $200, two-day Amtrak trip up to Montreal and back, staying the night at an Airbnb; and a $750 mattress after months of back pain from sleeping on an inherited mattress with a dip in the middle. When every purchase was so calculated, it’s hard to regret any of them.
I’m not sure what I’ll do, now that my loans are paid off. I’ve started buying so many clothes from Madewell that I look like they’re sponsoring me. I might start saving money, since my savings account still hasn’t risen above the original $1,000. I imagined that without loans, I’d be able to stomach quitting my job to work on a startup, but now that I actually get to keep my whole paycheck, it’s really started to grow on me. There’s this pair of flats from TOMS on sale now that I want, but decided to sleep on it for a few days since my other flats aren’t completely worn out yet. I wake up worrying they’ll run out of my size or the discount will go away.
Mostly, I feel like I have some sort of student loan postpartum. This thing I’ve put so much effort towards, that has dominated my thoughts, is suddenly gone. And it feels good.
This story is part of our College Month series, which is being wrapped up.
Dani Fankhauser is a journalist living in San Francisco, and co-founder of ReadThisNext, a social network for authors and readers. She plans to write a book someday.
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